DHHL lets delinquent lease swell to $242,000

The state Department of Hawaiian Home Lands for years allowed a Big Island man to make sporadic lease payments on a parcel in Hilo, with the past due amount eventually growing to six figures.

Yet even as he was skipping payments Lawrence Balberde was collecting thousands of dollars monthly by illegally re-leasing the roughly half-acre DHHL parcel to a Hilo church, according to department records and interviews.

After the Hawaiian Homes Commission learned that Balberde was collecting rent from the church through an unauthorized sublease since about 2010 but was not addressing his accumulated debt, Balberde’s lease was finally canceled in May.

Connect Point Church last week asked the commission to end plans for a public auction to award a new lease to the highest bidder for property the church has subleased at 168 Holomua St. since 1998.

But the department says it is sticking with the auction plan.

DHHL’s cancellation of Balberde’s lease came nearly eight years after he was sent an initial delinquency notice in December 2011, the records show. Last year DHHL sent several more notices seeking payment.

It’s not clear why the department waited seven years to send the additional notices.

But by the time the lease was canceled, Balberde owed the department $242,000 in back rent, according to its records. He also owed about $470,000 in delinquent property taxes, interest and penalties, the documents show.

To critics of the department, the way DHHL handled this case, including waiting years to cancel the lease, is only the latest of many examples reflecting the department’s long history of poor management of trust lands.

“Why do they operate like this?” asked Hilo resident Herb Freitas, 72, a beneficiary of the land trust that DHHL oversees. “It’s so confusing. I blame Hawaiian Homes.”

Cedric Duarte, a DHHL spokesman, said Balberde had a history of falling behind on payments, then repaying the department in large chunks. “There was a belief he would continue to make good on his lease agreement,” Duarte wrote in response to questions from the Honolulu Star-Advertiser.

In a follow-up interview, Duarte said Balberde was paying his $2,250 monthly rent to DHHL from August 2016 until the lease was canceled but was not paying down a six-figure debt he had accumulated over the years, including from 2012 to 2016 when he missed many payments.

The delinquent rents started accumulating more than a decade ago, but DHHL last week was unable to provide a more precise timeline.

The agency is working with the attorney general’s office to try to collect the unpaid debt.

The 200,000-acre land trust that DHHL oversees was created by the federal government about a century ago to help rehabilitate a native population whose members were dwindling in numbers and who had been largely displaced from their lands.

DHHL awards ranching, farming and residential homestead lots to those who are at least 50% Native Hawaiian. They pay $1 a year for 99-year homestead leases.

As with the 27,000-square-foot Hilo parcel, some trust land is leased to private parties to generate funding for homestead development.

Balberde, 81, told the Star-Advertiser that he stopped making payments to DHHL because he said the agency unfairly and abruptly tripled his rent years ago without notice — a contention not supported by DHHL documents.

The records show the 1969 lease agreement, which was for 55 years and was to expire in 2024, called for a 32% rent increase in 2009, going from $1,710 to $2,250 monthly.

Balberde acknowledged that he continued to collect rent from Connect Point even when he was not paying DHHL, saying he used that money to help pay bills and to underwrite charitable programs for Hawaiians.

He also said a now-retired land division manager for DHHL was aware that he was subleasing the property to the church, just like he had done in the years prior to 2010 when the agency had authorized the arrangement. “She knew everything that was happening,” Balberde said of the manager.

Balberde told a DHHL land agent the same thing in 2018, according to department records. But the agent told him during their phone conversation that the records don’t support Balberde’s assertion that the manager verbally approved the sublease arrangement, according to DHHL’s written account of the phone call. The agent also told Balberde that the department does not make verbal agreements because that would be illegal, the document said.

The amount the church was paying Balberde to occupy the property is unclear.

In the 2018 phone conversation, Balberde told the agent the monthly rent was $7,280. But he told the Star-Advertiser that the church paid only $5,200, with the remaining amount considered to be a donation from him to Connect Point.

Either total was well above Balberde’s monthly rent to DHHL.

Balberde called the department’s handling of his case sloppy.

And he isn’t the only one who has raised questions about the agency’s role.

Dion Maeda, Connect Point’s senior pastor, appeared before the commission last week and asked that the church be offered a long-term lease. He said his organization would be willing to pay fair market value of $2,457 a month for it.

Maeda, who became senior pastor in 2015, said Connect Point over the past four years has invested more than $550,000 in repairs to the building where it holds services, including fixing a rotting roof that was a safety hazard and a broken air-conditioning system. Balberde built the structure years ago.

The church paid for the repairs because Balberde refused to make them even though the sublease required him to, Maeda told the commission. Balberde said in an interview that he wasn’t responsible for repairs.

Maeda told the commission the church was unaware of Balberde’s problems with DHHL until the agency contacted Connect Point about the lease cancellation. Because Balberde was the church’s landlord, the church dealt with him.

Maeda called DHHL’s plan to seek the highest bidder for a new lease unfair and unethical, particularly after the church has sunk so much money into the property.

“Connect Point Church was put into this predicament with Lawrence Balberde because of DHHL’s poor management and negligence of oversight of their lessee,” he told the commission.

Maeda declined to elaborate when contacted by the Star-Advertiser.

Kahana Albinio, DHHL’s acting administrator for its land management division, told the commission that the agency was unaware that Balberde continued to sublease the property to the church once the initial agreement expired.

Such subleases require commission approval.

Asked how the Connect Point arrangement could continue for years without DHHL’s knowledge, particularly when the 500-member church is active in the small coastal community, Duarte said the land division has limited staff to oversee all the agreements under its jurisdiction, including leases, licenses and rights of entry.

The church’s request for a long-term lease is drawing support from Big Island residents who laud the institution’s public service, including its efforts to help the homeless and those displaced by Kilauea Volcano’s eruption in 2018.

“I know how much that church means to our community,” county Prosecutor Mitch Roth told the commission last week via phone, urging the panel to award the church a lease. Roth is not a Connect Point member.

Asked about plans for the parcel, Duarte said in his written response that DHHL would proceed with a fair and public auction to generate revenue for trust beneficiaries.

Connect Point leaders, he added, chose to invest in a property they did not own or have a long-term lease for.

“DHHL and its beneficiaries should not be held responsible for the church’s business decisions,” he wrote. “The responsibility of DHHL is to get the highest and best use from its commercial and industrial properties.”